Understanding high attrition rates within a retail bank finance department - Essay Example

UNDERSTANDING HIGH ATTRITION WITHIN A FINANCE ORGANIZATION DEVELOPING A COLLABORATIVE ROADMAP TO IMPROVE EMPLOYEE RETENTION Table of Contents Number Title Page Number 1. Abstract 3 2. Executive Summary 4 3. Conceptualization and framework 5 A Context 5 B Purpose of the Project 5 C Description of the Problem 6 D Preliminary Research Question 8 4. Description and Discussion of the Research Method and Topic 8 A Research Method 8 B Key Elements of Action Research 10 C. Description of the strengths and potential problems of method 11 D Rationale 11 E Topic and Relevance 12 5. Basic Research Steps 12 A Criteria and Process for Inviting Project Participation 12 B Data gathering and Analysis 13 C Project approval 13 D Proposed Timeline 13 E Final Project Proposal 15 6. Conclusion 17 7. References 18 Abstract This is project report for tackling a serious problem which is currently facing Bank 4 U. That is the problem of abnormally high attrition. This project is not intended to be an analysis of the problem. An analysis by its very nature is intended to be a review of the situation. This analysis is reviewed later and appropriate decisions are taken on its recommendations. This problem is sufficiently serious that only an interventionary approach to solve the problem will solve it. The Author proposes an Action research project in this proposal. The project team members will be managers and other personnel who will be able to act on the solutions as they come up in the research team. The members of this team will also not be disinterested members of this project, but whom this problem of attrition personally and professionally affects. The theory and practice of action research is sufficiently covered in the project plan to give an idea of the approach which will be taken to solve this problem and the rationale behind that approach. The problem itself is explored sufficiently to see how it could be properly solved using this method. The goal of the project team is to address this problem further resulting in drastic reduction in attrition in attrition at Bank 4 U. Executive Summary This Project was initiated by the top management of Bank 4 U. The author of this report was entrusted with implementing it. Action research methodology will be used. The theory will be accumulated from various scholarly sources. The problem, which was attrition, will be defined in great detail. It is apparent that this is a problem of very high magnitude with no apparent solution and that there is a requirement of an immediate intervention. A team of highly affected members of management will be put together. Using the various methodologies of Action Research, solutions will be constantly be discussed by the group and based on this discussion , various solutions will be continually implemented. The data gathered from implementations will be reviewed to look at possible modifications on a constant basis. The Author of this project , is also the originator of this project , would not lead this project , but be more of a facilitator . The members of this project will be more of a round table with everybody's opinions receiving the same value. This would be important for a successful intervention and prevent this action research project be taken over by one or a few people and defeat the purpose the panel. The project panel will be in place for the duration of the intervention Understanding High Attrition within a Finance Organization Developing a Collaborative Roadmap to Improve Employee Retention Conceptualization and Framework Context Bank-4-U is one of the nation's leading financial services companies serving consumers and small to mid-sized businesses through various subsidiaries in the Bank-4-U family of companies. The organization has grown extensively through a series of acquisitions and as a result needs to address challenges in the areas of cultural and technical integration. The Bank has maintained a long standing strategy of providing a higher level of personalized customer service than its competitors. Although this strategy has indeed positioned the Bank to be one of the fastest-growing financial services companies in the country, there is a significant gap between the Bank's efforts to create an optimal customer experience focusing primarily on the external customer at the expense of precious internal assets - the employee. Purpose of the project. The purpose of this project is to find ways to fix this problem by tapping into the twenty-first century leadership practices learned pursuing a Master of Arts in Leadership and by striving to create an environment conducive to change by building open channels of communication and bridges of collaboration that will lead to ownership and transparency within Retail Finance. In this context, this Action Research project will focus on the following elements identified by, Joseph Rost (1993): multidirectional influence between leaders and followers, the intention for real change, and the development of mutual purpose (pp. 102-103). As a member of the Bank's senior leadership team my primary responsibility is to drive forward operational excellence across the Finance organization. Operational Excellence is defined as "conducting business in a manner that improves quality, obtains higher yields, faster throughput, and with less waste." Additionally, I will reach out across the organization to leverage resources, data and insight to deepen our understanding of the underlying issues fueling high attrition and develop a strategy to increase retention rates of high performing and valued associates. Leadership in twenty-first century embodies what Rost (1993) describes as: "An influence relationship among leaders and followers who intend real changes that reflect their mutual purposes" (p.102). This initiative will be driven by the teams desire to cultivate a vibrant "living system" where all parts have equal opportunities to contribute to the whole. In reviewing the dynamics within communities of practice Fritjof Capra (2002) states that "..according to Arie de Gues "a strong feeling among the employees of a company that they belong to the organization and identify with it's achievementsa strong sense of community is essential for the survival of companies in today's turbulent business environment" (p. 109). This is a project utilizing Action research. Action research has two main components: ( Eden and Huxam 1996) 1. It is a one time emergency intervention 2. It is to find solution of a problem which is of genuine concern to the organization Description of the Problem The Bank's Executive Committee identified employee retention and attendance as one of the top 5 initiatives to address in 2007. As such, improving employee retention was incorporated as a goal in the 5-year plan. A study conducted in the 4th quarter, 2006 indicated that voluntary employee turnover is nearly 10 percentage points above the industry benchmark median. In addition, absenteeism levels within individual groups range from 2% - 5%. The Bank currently lacks a clear understanding of what is driving high attrition and needs a coordinated strategy to improve its ability to retain employees. A successful effort to align the Bank's retention and attendance levels to banking industry top quartile levels was estimated to have an annual benefit of $180M (including productivity gains, reduced spending for hiring, recruiting, etc.). This cost benefit analysis represents a preliminary finding and will be adjusted as additional data is collected and validated. As this attrition rate represents aggregated attrition across the Bank, each line of business has been tasked with the responsibility of determining what drives attrition in their respective operations and developing a strategy to improve employee retention. Preliminary Research Question What can be done to increase retention rates in the Retail Bank's Finance organization The formulation of this question covered perspectives both from an employee and an employer point of view, as to why he or she would want to leave (heavy work load, low salary, poor quality supervision, few opportunities for advancement). From an Employer point of view (Does the corporate culture promote a culture which lets the employee feel valued recognized and supported) ( Ricucci and Lurie 2001) Description and Discussion of the Research Method and Topic Research Method Peter Reason and Hilary Bradbury (2001) defined action research as "a participatory, democratic process concerned with developing practical knowing ... It seeks to bring together action and reflection, theory and practice, in participation with others, in the pursuit of practical solutions to issues of pressing concern" (p.1). Gary Kuhne and Allan Quigley (1997) view the action research process as "a cycle of problem posing and problem solving that goes through three phases in each cycle of research: a planning phase, an action phase, and a reflection phase" (p. 27). Action Research requires collaborative action followed by periods of reflection - period of time to glean deeper insights, build on lessons learned and develop an approach to address issues for the purpose of influencing change. Action Research is a three phases, six step approach to problem resolution. In the planning phase, a common concern, problem or pain point is identified. Within the planning phase a series of steps occur that are critical to harnessing collaboration and commitment from participants. Activities include (1) problem identification through brainstorming, research, and team consensus; (2) scoping the project, mobilizing the resources and securing the necessary approvals; (3) establishing a baseline and metrics to measure impact, change and improvement. The action phase focuses on data collection, data integrity, and observation followed by additional action. The reflection phase provides the opportunity for deeper analysis, meaning making and insights based on action. Action research is an iterative process that allows participants to refine the problem statement as new perspectives and insights emerge. There are various theories in Action literature research which we will review to optimize this project. Chris Argyris' Action Science: This begins with the study of how human beings design their actions in difficult situations. Human actions are designed to achieve intended consequences and governed by a set of environment variables. The next one is cooperative inquiry, also known as collaborative inquiry was first proposed by John Heron and later expanded with Peter Reason. The major idea of cooperative inquiry is to "research 'with' rather than 'on' people." It emphasizes that all active participants are fully involved in research decisions as co-researchers. Paulo Friere's Participatory action research has emerged in recent years as a significant methodology for intervention, development and change within communities and groups William Torbert's Developmental Action Inquiry is a "way of simultaneously conducting action and inquiry as a disciplined leadership practice that increases the wider effectiveness of our actions. Such action helps individuals, teams, organizations become more capable of self-transformation and thus more creative, more aware, more just and more sustainable" Jack Whitehead's and Jean McNiff's Living Theory approach .In the Living Theory approach of Whitehead and Whitehead and McNiff individuals generate explanations of their educational influences in their own learning, in the learning of others and in the learning of social formations. They generate the explanations from experiencing themselves as living contradictions in enquiries of the kind, 'How do I improve what I am doing We decided to combine the approaches together. Attrition being a topic which we are familiar with both as an employee and as an employer, we would start with the living theory approach. We would list all possible reasons why we felt our employees would leave the company and then list the reasons why we would leave a company. This was clearly a team effort where my role was limited to coordination and facilitation. Key Elements of Action research. Action Research is research which involves all relevant parties in actively examining together current action (which they experience as problematic) in order to change and improve it. They do this by critically reflecting on the historical, political, cultural, economic, geographic and other contexts which make sense of it. Action research is not just research which is hoped will be followed by action. It is action which is researched, changed and re-researched, within the research process by participants. Nor is it simply an exotic variant of consultation. Instead, it aims to be active co-research, by and for those to be helped. Nor can it be used by one group of people to get another group of people to do what is thought best for them - whether that is to implement a central policy or an organizational or service change. Instead it tries to be a genuinely democratic or non-coercive process whereby those to be helped, determine the purposes and outcomes of their own inquiry. Description of the strengths and potential problems of method. There is no doubt that using action research to find a solution for this complex and multi-dimensional problem would be a valuable approach as the AR process allows input from multiple sources and the solutions are tested repeatedly. Much of the rhetorical changes to participation, participatory research and the like, are at the end of the day, an outsider seeking to change. Who the outsider is may change, however the relation remains the same. A dominant individual or group seeks to influence change. In the final analysis, there may be a few people unhappy with the final solution or as a result of a variety of compromises not everybody would be happy with the final solution; however this is what would be imposed. From my perspective, this is a small price to pay for solving the larger complex problem. Of importance is that a collaborative and participatory process was used to approach problem resolution and the team allowed the data to frame the story, substantiate the hypothesis and drive decisions. Rationale This study focuses on issues relative to the Retail Bank Finance organization. The CFO of the Retail Finance organization asked me to address this issue and provide a report out of findings and recommendations during the August leadership meeting followed by a presentation and facilitated work session at the September "Two-Down Meeting". Phases and cycles of the AR framework will be managed by engaging a subset of the leadership team, primarily participants who have expressed an interest in the problem identified and a sincere commitment to influencing change within their respective departments. Topic and Relevance Cultivating an environment where collaboration, trust and confidence will thrive is critical to organizational growth and stability in the twenty first century. As a senior member of the Retail Bank Finance team my focus is to advance Operational Excellence which embraces Rost's (1993) definition of leadership: "an influence relationship among leaders and followers who intend real changes that reflect their mutual purposes" (p.102). Basic Research Steps Criteria and Process for Inviting Project Participation Individuals do not always come together and instantly turn into a high performing team. Team mobilization is a process where a significant amount of time can be spent in forward and backward movement as people posture, position and over time establish the trust and respect that allows them to become cohesive and high performing. Therefore in selecting key participants for this initiative, my approach was to request recommendations from senior leadership and solicit through the process of self nomination. This approach was designed to ensure support from leadership and engagement through genuine interest in the research topic. In retrospect I see a similarity between the team mobilization process and the AR process in that both processes can display iterative cycles of planning, action and reflection. Therefore, it was important to ensure all participants understood this dynamic, are comfortable with being "uncomfortable" until they collectively merged into a cohesive group with a mutual goal. Project Approval This project was initiated at the request of my manager, the Chief Financial Officer of the Retail Finance organization. Although this project is a subset of a larger organizational initiative, this Action Research project fell within my scope of responsibility, therefore formal approval was not required. To embrace the spirit of 21st Century Leadership, I collaborated with members of the HR and IT departments to secure historical data from the third party vendor that conducted associate surveys. Once data was available I teamed with HR to extrapolate and interpret data relevant to the Finance group. Cohen & Prusak (2001) emphasize the importance of bridging connections within the living organization as "the stock of active connections among people: the trust, mutual understanding, and shared values and behaviors that bind the members of human networks and communities and make cooperative action possible" (p. 4). Data Gathering and Analysis There is a lot of data which needs to put together for this project. Some of the data was available with HR department, but a lot of the data had to be mined. We were targeting not just the reasons of leaving but also, what kind of person would be most likely to stay, what kind of person would be more likely to stay. What kind of Jobs was losing the most kind of people Was there a particular time which saw spikes in attrition Then there is the data we have to collect from the employees themselves like surveys and job satisfaction rating compilations. Process mapping should be aligned to the employee's employment life such that it would be enough to cover the potential causes of attrition occurring in each step of his/her employment life. Project team can subjectively do prioritization of the causes using Prioritization matrix. Prioritization can be based on their interviews, Focus group discussions (FGD), observations, expert knowledge, observation and/or reports .Employee survey maybe helpful but it would only give results pertaining to the motivational factors or employee retention factors because only the active (existing) employees of the companies can only give feedback. Unless the project leader would be willing to do exhaustive exit interviews and call backs of resigned (attrition) employees. Data supporting the prioritized attrition factors can help solidify the hypothesis statements that can be formed for the Analyze phase i.e. excessive overtime, poor leadership or teamwork, uncompetitive company benefits Proposed Timeline: Although data was readily available, a significant amount data augmentation was required for the team to establish a level of confidence in the quality of information gathered. For example, additional employee surveys would need to be conducted; data relevant to why employees left the organization would be gathered through an analysis of information contained in exit interviews etc. The initial sizing to augment the data provided by HR was estimated to be a minimal of three weeks. The following outlines the proposed timeline for this project: Final Project Proposal: This project has been put together to find ways to minimize the attrition rate at Bank 4 U. The methodology followed this project will be the Action Research method. A Team will be formed for this project with me as the team co-coordinator. The team will itself consist of members of IT and HR departments as well as crossection from all departments. The team will consist of managers at both the line level and the department level. The team will have the ability to make and implement any decision taken in the group. The data provided by the HR and the IT departments will be supplemented by additional collection by the group itself. The life of the project will be six months; however there will be an annual review of the results. Since this is an action research project, there are a few preconditions to this project. This is a one time intervention in something which can be considered a corporate emergency. The team should consist of people: 1. Who have a direct involvement with this crisis and who are directly affected This could be line or HR managers. They will be the most motivated to find a solution. 2. The team members should be directly authorized as a part of their normal duties to be able to take any action required. This is not a benign brain storming session. But an action oriented intervention. Once the intervention begins, there is a need to get the whole organization involved via employee surveys and internal town hall meetings. The purpose of this project is not to fix a process or create a plan but to forcefully intervene. Once the project starts there has to be a slight spirit of irreverence. There are no Holy Cows here and no changes are off the table. With weekly meetings followed by action items which are implemented immediately this action research project will seek to culminate in 6 months. Conclusion The Project used theories of action research from Participatory action research, living theory action research and many related papers in the field. A preliminary research question was formulated and its context determined. Once the team was formed, specific research methodology of solving this particular problem was agreed upon. Each team member was to contribute their knowledge and their experience to resolve this intervention. In addition to knowledge and experience, A lot of data was collected from all available sources. Based on the data and the input various action plans will be submitted to the Senior committee over a six months, which would have a power of implementing or rejecting it. At the end of six month this action research project would be completed and it's effectiveness assessed by the senior committee , which will provide recommendations for future action. References Axelrod, R. (2000). Terms of engagement: Changing the way we change organizations. San Francisco: Berrett-Koehler. Capra, F. (2002). The hidden connections: A science for sustainable living. New York: Random House. Kuhne, G. W., & Quigley, B. A. (1997). Understanding and using action research in practice settings. In B. A. Quigley & G. W. Kuhne (Ed.), Creating practical knowledge through action research posing problems, solving problems, and improving daily practice (p.25). San Francisco: Jossey-Bass. Reason, P. & Bradbury, H. (2001). Handbook of Action Research. London: Sage. Rost, J. (1993). Leadership for the twenty-first century. Westport, CT: Praeger. Ortrun Z Skerrit A ( 1998) model for designing action learning and action research programs Oyvind P (1992) The End of Organization Theory, Language as a tool in action research and organizational development , John Benjamins , Philadelphia Eden C and Huxham C (1996) Action Research for management research British Journal of Management, Vol. 7, 75-86 Argyris C, Putnam R, Smith D M, Concepts, methods, skills for research and intervention, Jossey Bass San Fransisco Appendix "A" Read More